Reddit makes stock market debut in IPO – and shares SOAR as much as 70% as some Redditors complain site is selling out to Wall Street

Shares of Reddit rose as much as 66 percent as the social media site made its long-awaited stock market debut.

The shares opened 38 percent above their IPO price, giving investors who initially sold a huge windfall.

The 19-year-old company, which hosts thousands of online communities, priced its IPO on Wednesday at $34 per share.

But when the shares began trading on the New York Stock Exchange, they immediately rose to $47, a 38 percent increase from the IPO price.

Prices then reached a high of $56.50 – an increase of 66 percent from the target price.

That gives the company, which trades under the ticker “RDDT,” a valuation of more than $10 billion at its peak.

The company’s stock market debut is likely to spark a lot of commentary on Reddit’s own platform, as well as on rival social media.

CEO and co-founder Steve Huffman visited Wall Street this morning, where the recognizable Reddit logo mascot rang the opening bell.

Some so-called “Redditors” had complained that the San Francisco-based company was selling itself to Wall Street by going public.

The company is known for the 2021 “meme stock” saga, in which Reddit users drove up the prices of heavily shorted companies to counter investors betting against them. Many saw this as a victory for the “little guy” over the Wall Street giants.

Reddit’s stock market debut has been on the agenda for more than two years. It confidentially filed for an initial public offering in late 2021, but this was postponed due to rising interest rates and the stock market’s decline in 2022.

The IPO will test the company’s ability to overcome a history tainted by losses, management turmoil and occasional user backlash to build a sustainable business.

Reddit was launched in 2005 by Huffman and Alexis Ohanian as a place where users could freely submit content, whether that was photos, videos, memes, serious advice, or random observations.

These are then ‘upvoted’ or ‘downvoted’ by other users.

In the years since, it has grown into a site with more than 70 million unique daily visitors and devoted fans who take to its 100,000 communities called “subreddits” to discuss an endless array of eclectic topics.

CEO and co-founder Steve Huffman (photo, center) visited Wall Street on Thursday morning

The company’s debut also sets the stage for other companies looking to go public this year, while also testing investor appetite for new areas.

It’s the first time a major social media company has gone public since Pinterest’s debut in 2019.

Besides its quirky content, Reddit is also famous for the 2021 ‘meme stock’ saga.

This was when a group of retail investors on the subreddit “Wall Street Bets” teamed up to buy shares of highly shorted companies like GameStop and AMC.

In a nod to Redditors, the company reserved 8 percent of the offered shares for eligible users and moderators, certain board members, and friends and family members of its employees and directors.

Some so-called ‘Redditors’ had complained that the San Francisco-based company is selling itself to Wall Street by going public (Photo: The New York Stock Exchange Thursday)

Pedestrians pass a GameStop store on 14th Street in Union Square in Manhattan on January 28. The GameStop saga is being portrayed by some as a victory of the little guy over Wall Street giants

But analysts warned this was a risky move that lends itself to volatility.

Retail traders eager to gain exposure to a newly listed company are typically excluded from bidding in an IPO and only purchase shares when they begin trading, which can lead to a run-up on the first day and then a decline.

“Because this has such a rabid community around it, the Reddit users, you could ironically see Reddit itself become a meme stock like you saw happen with AMC and GameStop,” Headline venture partner Kamran Ansari told me. Yahoo Finance.

But the frenzy over tech stocks could help Reddit get off to a good start, says Josh White, an assistant professor of finance at Vanderbilt University.

“We don’t get a lot of big tech IPOs. Those tend to be very popular because it’s hard to buy that kind of growth,” he said.

But despite its cult status in the social media world, the company has failed to match the success of rivals Meta and X.

The company says it is “in the early stages of monetizing its operations” and will not yet make an annual profit.

Investors will analyze whether there is a path to profitability.

“The real news will come after the first earnings call — where are they going, what will the results look like, what changes will they make,” said Reena Aggarwal, director of the Psaros Center for Financial Markets and Policy at Georgetown University. , told Reuters.